In this chapter, we summarize and structure the alternatives discussed above into a set of overarching recommendations for an initial pilot implementation. The repara- ble-management process for returning unserviceable assets to a serviceable condition to meet customer needs is complex and involves many stakeholders. Thus, our intent is to sketch an integrated approach that addresses some of the fundamental causes of the lack of adequate serviceable DLRs for issue to customers.
The Need for a More-Responsive Reparable-Management Process
For a process as complex as reparable management, the causes of the current unsatis- factory performance levels are certainly open to debate. While we have not attempted to identify either the root causes or the dominant causes of the problems, our case- study-based analysis identified evidence of some causal relationships, and we have proposed some alternative approaches to attain improvement.
The availability of reparables to customers can be dramatically improved with- out increased resources. Examples of ways to efficiently improve each area can be found in successful commercial practice, as well as in some isolated successes within military practice that deserve expansion.
The case study suggests a need to emphasize an integrated approach to plan- ning and execution (i.e., frequent replanning), one that involves both the item- management team at the MSC and the depot-maintenance team. This analysis ex- amines the management of availability of reparables to meet the dynamic needs of Army warfighters.1 It assumes current DLR reliability, existing information technol-
ogy at the MSC and the depot, available repair capabilities and capacity, and current DLR inventory-level (with the exception of safety-stock levels) determination meth- ____________
1 The reliability of reparable assets requires an inventory of serviceable spares to buffer the mission needs of the
Army. The focus in this study has been on management of the availability of serviceable reparable assets and al- ternative approaches that could make the process more responsive to changing demand patterns.
72 Improving the Army’s Management of Reparable Spare Parts
odology and practices. In the long term, all of these assumptions are subject to chal- lenge.
Recommendations for a Pilot Effort
Implementation of improvement initiatives can be made more tractable by starting with a pilot effort focused on DLRs for which there are applicable improvement al- ternatives. Because this analysis focuses on the reparables process, the activities in- volved include a vertical slice of interdependent activities at both the MSC and the supporting depot. Therefore, alternatives potentially cross organizational and func- tional boundaries. With a pilot implementation effort, limited permission can be granted to try new procedures and policy proposals in a “laboratory” setting, thereby reducing the risk of change for the larger organization. Results can be measured, rules adjusted, and confidence developed before widespread change is implemented. Of course, practical mechanisms must be developed to apply the successful and proven concepts to a broader workload. With literally thousands of reparable NIINs poten- tially involved, full implementation of the desired changes will take careful planning and time.
The overall measure of success would be a reduction in the number and dura- tion of BOs for the selected NIINs without exceeding the serviceable inventory levels needed to meet customer requirements. Therefore, both BO rates and CWT should be used as performance metrics.
We recommend that senior management at an MSC appoint a small pilot im- plementation team that focuses initially on a few reparable NIINs related to a single weapon system or end-item that is repaired at the same facility.
Following the discussion in Chapters Four and Five, we recommend that the pilot implementation should
• Address uncertainty concerns.
• Properly link long-term planning and replanning for responsive execution. • Improve repair responsiveness.
The first two recommendations focus extensively on the managing MSC. The third primarily concerns the supporting repair activities. However, the MSC and the repair depot need to work as a team to improve the overall process by integrating and synchronizing their efforts.
The discussion that follows expands briefly on each of the alternatives described earlier. Interactions exist among the alternatives, and care is required to ensure that the initiatives implemented are sufficiently complementary to achieve the desired level of improvement. The level of such interaction may vary, depending on the
Recommendations for Pilot Implementation 73
NIINs chosen for the pilot program. For example, in the case study, merely improv- ing the responsiveness of replanning and changes to repair PRON quantities was not sufficient when the parts available to support the repair also had deficiencies. While coordination or synchronization of implementation may not necessarily be required for individual alternatives, it may often be necessary to ease more than one constraint simultaneously; alternatively, the easing of a constraint can permit the clear visibility of the next constraint.
Addressing Uncertainty
We recommend addressing uncertainty in four ways:
1. Use current forecast models while looking to future improvement. 2. Use revised monthly forecasts for near-term decisions.
3. Selectively adjust DLR safety stock.
4. Implement strategies that shorten lead times.
First, we suggest continued use of the current forecasting model in the RD&ES module. In the long term, the Army should evaluate all such decision models with the aim of developing and implementing improvements, but there is no evidence that a dramatically improved forecasting tool is available at this time. The limitations of the current model are associated with the long planning horizons required for the budget and other long-term planning tasks. Therefore, the best basic approach is fre- quent replanning using revised forecasts based on current data, where possible. The already-implemented move to monthly execution of RD&ES against the reparable items is thus the appropriate approach.
Second, in the near term, it will be important to place greater emphasis on use of the monthly production projections from the current RD&ES module of CCSS. The activities at both the MSC and the depot require revised (near-term-horizon) forecasts of production needs. In addition, adjustments can also help prevent over- production when demand declines. For example, not only does the depot repair shop need to know the revised number of units required for the month, it must also be recognized that the IM will often need that output delivered to DLA distribution centers more frequently than just once at the end of the month. Provisions are needed to facilitate direct discussion between the IM and the depot scheduling clerk or shop chief to negotiate desires and limitations that will benefit the customer. Ex- isting e-mail and telephone capability could be used.
Third, selective adjustment of safety-stock levels for some DLRs could have an immediate impact on responsiveness (i.e., CWT). It is not initially necessary to change safety-level policy for Army DLRs. The implementation team need only analyze and determine a level for pilot implementation that recognizes the realities associated with a specific NIIN and then evaluate the impact the stock level has on
74 Improving the Army’s Management of Reparable Spare Parts
customer requirements and the ability of stock to better accommodate demand un- certainty.
Finally, the same analysis that informs the decision on safety stock should pro- duce an initial target for effectively shortening the repair lead time for a given NIIN. There is interaction between operating stock, safety stock, and repair lead times, and thus a coordinated strategy is called for. Moreover, revisions to both parameters should be possible over time as various activities and conditions improve throughout the process. For example, lower repair lead times reduce the need for operating stock; faster repair can substitute for inventory investment.
As progress is made to improve customer support, it will also be important to update the data in the CCSS database for the NIIN, so that better revised monthly forecasts are available to permit informed decisions. While the examples presented here have emphasized reducing customer BOs, it is just as important in the long run to prevent unnecessary repairs that place a NIIN in a long supply condition (i.e., the accumulation of serviceable assets above the desired inventory level). As an example, when programmed changes to fielding densities are not updated in the database, the model calculus will not properly reflect desired inventory levels.
The approaches recommended here address issues similar to those that should be considered and communicated during a thorough monthly supply-control study. However, our recommendations raise some specific issues and parameters that were not being considered when we analyzed the M88A1 engine case study: safety stock, lead-time strategies, and direct contact with the source of repair. While this may sound complex and time-consuming when considered for each DLR, the real com- plexity rests in the initial analysis for the NIIN. Once the strategy for that NIIN is determined, monthly effort can focus on communication with the depot and data- base-maintenance actions. Mechanisms such as e-mail could be the basis for im- proved communication between IMs and repair supervisors. The key issue here is to make repair-program execution activities that respond directly to customer demands the first priority for those involved. These strategies do not reduce variability in de- mand over the planning horizon. Rather, they mitigate the impact of that variability.
Properly Linking Long-Term Planning and Replanning for Responsive Execution
We recommend properly linking the management of long-term planning and near- term execution:
1. Long-term planning
a. Focus on budget and capacity-planning activities. b. Revise the future program basis at least quarterly. 2. Near-term replanning
a. Focus on responsive execution and metrics that reflect customer support at least monthly.
Recommendations for Pilot Implementation 75
b. Take a NIIN-level and customer-needs view.
c. Link production output to actual customer demands. d. Decentralize execution decisionmaking.
Long-term planning activities must continue to address the needs of budget de- velopment and capacity planning. These activities deliberately call for long planning horizons. We are advocating the use of revised forecasts to revise planned PRONs and other actions as new information becomes available. The long-term planning tasks exist to take imperfect predictions of future requirements and plan the best re- sponse possible that can meet those requirements. Therefore, near-term replanning actions are critical.
The emphasis recommended here brings the focus of the IM and the repair de- pot to the daily task of responding to the warfighter’s requirements. CWT should be a key metric. How long the customer waits for the need to be satisfied and the consis- tency of that service level are important. Metrics such as BO rates provide further, deeper insight into causation. However, visibility of customer needs is key to re- sponding effectively. Between the SSF implementation and the improved visibility of tactical customers through the Integrated Logistics Analysis Program (ILAP) and the ADM website, the IM has a better view of the requirement and now needs a path to improvement. The near-term alternatives link repair production to sales and needs by using the monthly RD&ES output to pull just enough production for the NIIN to meet and sustain the current demand. As lead time is reduced, the IM will need mechanisms to share sales information even more frequently with the repair shop so that it can respond effectively. The implementation team will need to revise policies and procedures that will enable IM and repair personnel to operate promptly at ac- ceptable risk to achieve the desired results. There is clearly an implication that some decisions will be decentralized or will be permitted outside the current decision chain.
Procedures and bounds will need to be developed, and some training may be required. However, a systematized decision structure is envisioned that is still much more flexible than the current structure. The key is in the small incremental adjust- ments that would be involved with the shorter decision horizons associated with re- planning. Most IMs already make incremental decisions daily to allocate scarce DLR resources among customers awaiting assets. The decisions envisioned would be no more complex or risky, but the goal would be to focus the IM’s efforts on maintain- ing defined levels of stock so that the CCSS software logic can handle the DLR allo- cations from the available serviceable inventory. There are still decision constraints around PRONs, shop capacity, etc. Within the bounds of those constraints, incre- mental decisions that improve customer support are the objective.
However, effective planning alone does not put serviceable assets on the shelf. The case study showed that improvements are also needed in the repair environment.
76 Improving the Army’s Management of Reparable Spare Parts
Improving Repair Responsiveness
The designated repair activity must have the capability and capacity to respond promptly if the overall process is to effectively and efficiently meet customer needs. We recommend addressing improvements to repair responsiveness in four ways:
1. Production and scheduling controls a. Use pull production scheduling. b. Improve controls on WIP.
c. Reduce lead time to complete repair of the next asset and continuously re- duce overall repair flow time.
2. Repair parts availability
a. Revise current DOS policy to add diversity, depending on different NIIN characteristics.
b. Make demand-based investment decisions. 3. Unserviceables availability
a. Improve asset turn-in and retrograde. 4. Financial policies
a. Ensure that any carryover workload addresses current customer demands, not customer BOs.
b. Improve economic transparency.
c. Evaluate and pilot net and marginal pricing.
The first requirement for success is the ability to accept changes in workload, in- tegrate them into the affected work centers, and ensure that all workload require- ments can continue to be met over time. The long-term planning and PRON ap- proval include coordination with the maintenance depot. In addition, the more frequent replanning and coordination described above provide a continuing dialogue on the incremental changes to the schedules. Therefore, as long as the depot plan- ning activity and the work-center schedulers and supervisors are kept informed on a continuing basis, the depot will be aware of the critical constraints and can be proac- tive about developing alternatives to ease the critical constraints in time to accom- modate customer needs.
The alternative we recommend calls for the work-center scheduling clerk and the repair supervisor to use the revised production requirements from the IM to ad- just the production schedule and repair-parts ordering. The most significant change would be the shift to a pull schedule, which can reduce lead time, provide flexibility for dealing with demand changes, and protect against overproduction when demand slows. A pull schedule is also relatively easy to manage with minimal IT require- ments.
Recommendations for Pilot Implementation 77
Lead-time reduction to improve the responsiveness of the repair activities should deal with time until the completion of the next repair and also reduction of the overall repair flow time. The pull scheduling and production-control techniques would facilitate these efforts.
The second issue that must be addressed is that of assuring the availability of sufficient repair parts for every task required in the repair procedure. The pull sched- uling approach provides one option for addressing this issue. Stock should be issued to repair technicians at their work locations, and “kitting” of parts for NIIN repair at a location should be pursued to the maximum extent possible. In addition, all parts used in support of DLR repair should be ordered as recurring-demand materiel so that the demand history is provided to the relevant IMs for planning vendor replen- ishment. The ASRS provides critical control and visibility for both new repair parts and serviceable reclaimed material. Provision should exist for the use of a local- purchase credit card for prompt resolution of part shortages for material backordered from the national provider. Such purchases should be only for quantities sufficient to meet schedules and customer needs (i.e., responsive repair quantities).
After the depot has brought its inventories under better control, better coordi- nation and support for new repair parts from the IMs will be needed in AMC and DLA. The coding of parts as recurring demands is the first important step toward providing more-accurate information to IMs. That information clarifies the need for continuing vendor support. However, the IM for the DLR NIIN also has parts- consumption data about low-usage items that are still necessary for support of the DLR. These data need to be coordinated with the appropriate IMs so they can de- termine inventory and vendor availability. In some cases, the Army may decide to buy assets for depot shop-stock inventory as insurance for future availability. The IMs must also be aware of vendor lead times for items to ensure that either vendor relationships are in place or that procurement actions are taken in time to support the repair programs.
The costs associated with low-usage and long-lead-time parts are some of the highest investment costs to support DLRs (after the cost of the DLR itself). A 60- DOS policy may not be nearly sufficient with respect to such items. On the other hand, many items used on nearly every repair and ordered frequently as recurring demand could be stocked at less than 60 DOS. Furthermore, the scheduling initia- tive described above will both reduce WIP and provide shorter repair-cycle times that together may permit reductions in future DLR investments.
As the overall reparable process becomes more responsive to the customer, the issue of the availability of unserviceables will become more apparent. The limited availability of some DLRs has already increased the need for improved flow through the reverse logistics pipeline for the retrograde of these unserviceable assets. However, for some DLRs for older current systems, “excess” unserviceable carcasses are the most efficient source of critical repair parts. Furthermore, the importance of an effi-
78 Improving the Army’s Management of Reparable Spare Parts
cient reverse pipeline will grow as the Army’s maintenance transformation to two- level maintenance progresses.
Finally, the financial policies related to reparables need to be aligned with sending signals to customers and all the other participants in the process. Individuals throughout the Army try to do the right thing. In the absence of full and correct in- formation, they try to act rationally in their local context. The challenge is to recog- nize and acknowledge just how motivated some individuals are and to give them the